D.C. Council Chairman David A. Clarke, ending a months long review of the D.C. auditor's office that erupted in controversy this spring, nominated Otis H. Troupe Jr. yesterday to serve a second six-year term as the city's auditor.

Clarke also released a report by a three-member review panel he appointed that recommended Troupe's office do more traditional audits rather than duplicate any criminal investigations, keep draft audit reports more confidential, refrain from supporting political candidates, be given more staff and improve relations with the office of Mayor Marion Barry.

Earlier this year, Clarke and Troupe were embroiled in a bitter public exchange. Clarke had complained that Troupe, in an effort to boost his renomination chances, was promoting a political-style campaign of letter writing and lobbying of other council members who must confirm the appointment.

Troupe supporters strongly suggested at the time that Clarke was attempting to remove Troupe as a gesture to Barry, whose administration has been the subject of several critical audits by Troupe. Clarke denied the criticisms and Troupe later stopped his public campaign after being advised to do so by several council members who supported Troupe's renomination.

The six-year auditor's term is one of the most significant appointments made by the D.C. Council chairman and is not subject to review by the mayor's office. Troupe was originally appointed by former Chairman Arrington Dixon, whom Clarke defeated for the chairman's office in 1982.

The auditor is responsible for reviews requested by the 13-member council and regularly undertakes audits of city agencies and Advisory Neighborhood Commissions. The office also investigates complaints from the public and has authority to initiate audit reviews on its own.

Clarke said last winter that he likely would reappoint Troupe but also wanted the review panel to assess the auditor's office. "I wanted a thorough examination -- an audit of the auditor's office," Clarke said yesterday. "He came out well."

In a written response to the panel's findings, Troupe said his office has attempted to keep cordial relations with Barry's aides but said they had often not responded in timely fashion to his requests for information.

"You can ask tough questions and still maintain cordial relations," Clarke said yesterday.

Troupe also denied that his office leaked copies of draft reports to the news media. On investigations, Troupe said his office naturally would have "overlapping concerns" with federal and other investigative agencies probing mismanagement or corruption in the District. The review panel also suggested that results of investigations by the city's inspector general and D.C. agencies be made "freely available" to Troupe.

The members of the panel were former federal reserve board member Andrew F. Brimmer, former U.S. General Accounting Office director Elmer B. Staats and former District auditor Matthew S. Watson.

The panel reported that operations of the office had "matured and strengthened" under Troupe but recommended that the D.C. Council hold more hearings on Troupe's findings to make better use of his work.

Troupe, a Republican, contributed to the mayoral campaign last year of D.C. Council member Carol Schwartz (R-At Large).